Mobile-based bank account KCB M-Pesa has disbursed a total of Sh10.3 billion in loans to its customers since March last year, indicating a growing appetite for short-term loans.
The platform has been advancing between Sh25 million and Sh30 million in loans daily over the past 17 months of operation.
The joint venture between the bank and Safaricom has signed up 6.4 million account holders with over Sh286 million saved on the platform.
“Through this platform we have been able to contribute towards driving the financial inclusion agenda. Of great significance has been its role in providing a backup plan for our customers to free them from the fear of unforeseen events,” said Safaricom CEO Bob Collymore.
KCB M-Pesa was launched in March 2015. The platform allows registered customers to save up to Sh1 million, earning up to six per cent in interest. Account holders can also access up to Sh1 million in instant loans, accessible on the M-PESA menu. The loan can be repaid in up to 180 days.
The amount lent through KCB M-PESA is the equivalent of that processed by a mid-tier bank in the country. “The ubiquitous mobile phone has changed the way financial services are consumed. It has made it cheaper and more convenient for account holders to access their bank accounts,” said KCB Group CEO Joshua Oigara.
Third of the total airtime
Loans and credit disbursed via mobile banking has been growing despite banks seeing the stagnation of their loan books in the first six months of the year.
Mobile phone subscribers borrowed up to Sh30 billion worth of airtime or nearly a third of the total airtime Safaricom sold last year, underlining how critical telecoms operators have become in the credit market.
At Sh30 billion, Okoa Jahazi’s loan book was larger than that of some bottom-tier commercial banks — making it a significant player in the credit market.
Safaricom, in addition to partnering with KCB, also has a partnership with Commercial Bank of Africa (CBA) to offer short-term loans through its mobile money platform.
The product dubbed M-Shwari currently has 13 million customers and disburses loans for a period of 30 days (with the rollover option) for a one-off interest rate of 7.5 per cent.
The maximum amount was initially capped at Sh20,000 but individuals with good repayment history can receive up to Sh50,000 disbursed into the mobile phones. The lowest amount one can borrow is Sh100.
M-Shwari processes an average of 70,000 loans daily.